The United States Federal Aviation Administration (FAA) downgraded the Civil Aviation Authority of Malaysia (CAAM) from Category 1 to Category 2.
Under the ruling the FAA said Malaysia failed to meet 33 areas of its audit scores, from about 300 queries - the ruling prevents Malaysian carriers from establishing new routes to the US.
CAAM is disputing the claim saying there were only 22 outstanding issues found, leaving 11 issues which it deemed ambiguous and undetermined by the FAA.
The CAAM has pledged to rectify the 33 issues.
In Malaysia, the only airline affected by the ruling is AirAsia X.
Commenting out on the ruling, CEO Tony Fernandes is not worried about the decision saying there are “many ways of expanding to America," despite the downgrade.
He said: “Whatever is in operations is in operations. We have many ways of getting to America; we have AirAsia Japan. So do not worry, there are plenty of options to expand into America."
The group has said its long-haul route from Kuala Lumpur (KUL) to Honolulu, Hawaii (HNL) via Osaka, Japan, would remain operational.
In statements given to the media, Fernandes said it would be a great opportunity for Malaysia to ‘reset’ the local aviation sector, while restoring its Category 1 ranking.
“I am very positive," he said. "When I started 18 years ago, CAAM which was formerly known as the Department of Civil Aviation (DCA) was one of the most respected civil aviation authorities in the world.
“I credit the DCA with AirAsia’s success. I have no doubt that we have the people and the quality but we just must get the best people."